National Security on the Docket

Kindhearts for Charitable Humanitarian Development, Inc. v. Paulson

Status:

Case Dates:

Thursday, 9 October, 2008 - Saturday, 22 September, 2012

Facts:

Kindhearts is a Toledo-based charity that funds day care and the like in Israel and Palestine. In early 2006, the federal government froze its assets while it investigated whether to charge it with support of terrorists (Hamas). Kindhearts has been, effectively, shut down all this time with no real opportunity to demonstrate that the charges against it are bogus.

Legal Theory:

Our lawsuit argues that the government’s action violates Kindhearts’ rights to due process to address the charges. The extraordinary time that this has taken has done irreparable damage to the reputation and interests of the charity and left the charity and its people under a horrible cloud of mistrust and fear.

Status:

A groundbreaking lawsuit was filed on October 9, 2008 in the U.S. District Court for the Northern District of Ohio. Briefing and oral argument took place in late 2008 and early 2009.

On August 18, 2009, the court ruled on the government’s motion to dismiss and our motion for partial summary judgment, granting each in part. The court granted the government’s motion to dismiss with regard to our claims that the Fourth Amendment precludes final designation of a charity as a terrorist organization, the authority of the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) is void for vagueness, and several of our due process claims. However, the court granted several of the claims made in our motion for partial summary judgment. Specifically, the court ruled that the government cannot freeze an organization’s assets under a terror financing law without obtaining a warrant based upon probable cause (Fourth Amendment violation). The court also found that the government must give the organization notice of the basis for freezing its assets and a meaningful opportunity to defend itself (due process violation).

The court held a status conference on September 21, 2009, to schedule briefing and argument on the remaining issues. Also on September 21, 2009, we filed a motion for interim relief or a temporary restraining order, seeking relief for the constitutional violations the court found in granting us partial summary judgment on August 18, 2009. Briefs were filed and oral argument was heard.

On October 26, 2009, the court granted a TRO restraining the government from classifying Kindhearts as a SDGT (Specially Designated Global Terrorist organization) and basically staying the designation process pending a final determination of remedy for the constitutional violations found by the court in August 2009. The court accepted briefs on the issue of what the final remedy should be.

On May 10, 2010, the court issued an order granting relief for the constitutional violations it previously found. The court ruled that the U.S. Treasury Department’s freezing of the charity’s assets was unconstitutional and that in order to comply with the Constitution, Congress must fix the law to require a warrant be obtained based upon probable cause before taking such action. The court also found that the Treasury Department’s failure to give the charity notice of the basis for freezing its assets violated the Constitution by preventing the charity from being able to meaningfully respond to the freeze. The court also ruled that OFAC violated the Fifth Amendment’s guarantee of due process by failing to provide KindHearts notice of the charges against it or a meaningful opportunity to respond. It held that OFAC must remedy these failures by declassifying or adequately summarizing the classified evidence against KindHearts or by allowing KindHearts’ counsel to view the classified evidence pursuant to security clearances and a protective order.

Briefs and reports were filed in 2010 regarding classified evidence and government showing of probable cause. Oral argument about remedy has been postponed at the parties request to provide time for settlement discussions. Status reports were filed April 15, May 16, and July 22, 2011. A telephone status conference was held August 15, 2011 and a status report was filed September 15, 2011. A telephone status conference was held October 7, 2011, and a status report was filed November 14, 2011. A telephone pretrial conference was held on Nov. 28, 2011. The parties reached a settlement agreement and informed the Court by status report on December 31, 2011. The Court ordered the parties to file a dismissal order or further status report by July 1, 2012.